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Opinion: If Canadian Investor Immigrant’s Funds are Already Being Put “At-Risk”, We Might as Well Fund Social Projects
Without mincing work, it is clear from the opening, closing, reopening, and extension of Canada’s Investor Immigrant Venture Capital Program (IIVCP) that the program has been, currently is, and most likely will be a flop.
I have assisted several colleagues in writing pieces on the IIVCP and as optimistic as we have tried to make it sound in each piece, the front end program requirements are simply unattainable for most and undesirable for almost all who want to immigrate by investment.
Perhaps even worse is the back-end design of the IIVCP. I have had conversations with several seasoned investors about this program. The actual monetary value of the program does not bother them as much as the complete inability to direct any positive outcome from the program.
From what the instructions and legal requirements seem to set out, it is simply $2 million passed from the Investor Immigrant to CIC who passes it on to the Business Development Bank of Canada (BDC) who lets you know in 15 years whether you are entitled to any ROI.
The seasoned investors I have talked to want to be able to know whether their investments are being pooled or separately managed, whether they will be used to invest only in profitable companies or arbitrarily divided among all companies in the funds, hoping for one gold mine to pan out.
If we’re already going at risk, we might as well gain some social rewards
From a personal perspective, I have never been a fan of a purely passive investor immigration program. I completely agree with the Government’s shutdown of the old model, one that saw a lot of individuals and institutions make a lot of money, none of which was really reinvested into the Canadian economy and arguably has created political and social divisions in cities such as Vancouver.
I also am wary of the flip-side of the debate. Investor immigration is not economic immigration, and is separate from most of the entrepreneurial programs run through various PNPs. We cannot create a program that is so heavy on requirements for investors to meet, so much so that they feel so burdened and do not want to participate.
Unfortunately, rather than striking the fine balance between passive and active, we have the worst possible balance of active requirements on the front end and a passive process of the back end.
I think the right balance of passive and active is ultimately in the social beneficial outcomes an investor immigration program can produce. At a time when social funding for the arts, music, social housing, legal aid, adequate statistics, is at a low, here you have a group of investor immigrants who are willing to assist these groups and meanwhile gain some sort of tangible benefit.
This is not a novel concept – the United States EB-5 has element of socially-beneficial investment. Austria has the option of Citizenship through a $2million dollar charity donation [extreme], and Antigua offers a donation to one of the sugar-cane industry labour groups.
So What are You Proposing – Social Capital Immigrant Investor Program (SCIIP)
I don’t believe in tying investor immigrants up in the IIVCP. There’s a Start-Up Visa program picking up steam that adequately facilitates individuals who want to go that venture capital route.
I am proposing that we switch the IIVCP to the SCIIP. The Federal Government (working with its Provincial and Municipal counterparts) can set up a fund or projects designated for socially beneficial purposes.
The investment will be completely at risk (you can make it the same $2 million or go down to $1 million), regardless you are donating money to a good cause to get a PR. You are doing this much like you donate money at the door of a charity event in order to be able to enter and mingle with the guests.
Aside from the feel good nature of having helped an important cause, the amount of the investment can also returned if certain tasks are accomplished within a, let’s say, five year window. For example, if the Applicant starts up a non-profit charity, the amount raised by that charity can be partially deducted from the total amount. Alternatively, it the Applicant starts up a for-profit business, the number of Canadian jobs created can factor in to some sort of a return on initial investment.
This type of passive/active mix would work. You have the option to stay passive – pay your money and help someone while getting PR, or you can be active, pay your money and bring more benefit in the process of trying to earn a return on your PR.
I think it’s very much time we investigate these alternative options. When I studied the Labour-Sponsored Venture Capital Corporation Tax Credit in law school last year, one of our key findings was that mixing private-equity and government-supported equity may in fact crowd out, rather than promote further private investment.
Just my two cents on this matter.
Breaking down the Bridge – Open Bridging Work Permit
Two weeks ago, CIC introduced clarified instructions on when an Open Bridging Work Permit would be issued with respect to economic class applicants (see: http://www.cic.gc.ca/english/resources/tools/temp/work/prov/bridging.asp).
The parameters are as follows:
1) They are currently in Canada;
2) They have valid status on a work permit that is due to expire in four months or less;
3) They are the principal applicant on application for permanent residence under the Federal Skilled Worker Class, the Canadian Experience Class, the Federal Skilled Worker Class, and the Provincial Nominee Class;
4) They have received a positive eligibility assessment on their permanent residence application under one of the Economic Class programs above;
5) They have applied for an open work permit; and
6) They have paid the required fees for the work permit and Open Work Permit holder fee;
It is equally important to look at some of the individuals who are not qualified to apply for a brdiging open work permit
1) Foreign Nationals (FNs) who are Work Permit-exempt Business Visitors;
2) FNs whose status has expired and must apply for a Restoration of their Temporary Resident Status;
3) FNs whose work Permits that expire in more than four months or if there is a new LMIA that can be used as the basis of the work permit application;
4) FNs who are applying for a bridging work permit at the Port of Entry;
5) Spouses and Dependants of PR Applicant -although they may be eligible for an open work permit but this on a separate basis, R205(c)ii) of IRPA, C41 (see: http://www.cic.gc.ca/english/resources/tools/temp/work/opinion/policy.asp)
6. Provincial Nominees who have not submitted a copy of their nomination letter in an briding work permit application or their nomination letter indicates employment restrictions.
Acknowledgement of Receipt from CIO
The eligibility trigger for FSWC, PNP, and CEC applications is the change of Eligibility status in GCMS or, and Applicants will likely find out this way, through the receipt of an Acknowledgment of Receipt from CIC – CIO.
Express Entry
Express Entry is more peculiar in that there are two Acknowledgement of Receipt letters. The first, when you submit your electronic Application for Permanent Residence does not qualify for the purposes of applying for the Bridging Work Permit. You must wait until your application is considered complete pursuant to s.10 and s.12.01 of IRPR. Atrt this time you will receive an official Acknowledgment of Receipt indicating that the letter may used to support a BOWP.
Employment Restrictions
For Provincial Nominees, it is crucial to review the Nomination Letter prior to submitting this application. There may be an Employer indicated, a NOC indicated, but the key box to consider is whether there are employment restrictions, a separate box located on current nomination letters.
Term of Issuance
Based on the instructions, it appears that these are being issued for 12 months, with further extensions to stay on an open work permit considered on a case-by-case basis.
Express Entry Technical Amendment: You Can Get Scores for Non-Continuous Canadian Work Experience
Citizenship and Immigration Canada (CIC) has made several technical amendments which came in force May 30, 2015. These amendments are a welcome clarification and should assist those applicants with several years of Canadian work experience. Ultimately, it may give several applicants a big Comprehensive Ranking System (CRS) Score point boost!
Per CIC (http://www.cic.gc.ca/english/department/mi/express-entry.asp) [emphasis added]:
DEPARTMENT OF CITIZENSHIP AND IMMIGRATION
Notice: A technical amendment has been made to sections 15, 19 and 25 of the Ministerial Instructions for the Express Entry Application Management System.
Paragraphs 15(3)(b) and 19(4)(b) were modified to remove the requirement that Canadian work experience be continuous for determining points under the Comprehensive Ranking System for the candidate, spouse or common-law partner.
For consistency and clarity, the Ministerial Instructions were also modified as follows:
- The term “with one or more employers” was added to paragraphs 15(3)(b), 19(4)(b) and 25(1)(b);
- The term “full-time employment” in subsections 15(5), 19(6) and 25(3) was replaced by “full-time work;”
- Subsection 19(3) was repealed; and,
- The word “emploi” in subsections 15(6), 19(7) and 25(4) and paragraphs 15(7)(a) and 19(8)(a) of the French version of the Ministerial Instructions was replaced by “travail.”
These Instructions come into force on May 30, 2015.
Note: As of May 30, 2015, all valid Canadian work experience will be recognized under the Comprehensive Ranking System (CRS) of Express Entry as CIC is removing the requirement that Canadian work experience be continuous. As a result, foreign nationals with Canadian work experience could see an increase in their CRS points.
You can see a specific effort by CIC to address the challenges particularly faced by the increasing number of contractors (explaining the change in definition from employment to work) as several were negatively impacted by the continuous work experience.
If I am not mistaken, the challenge with continuous work got to the point where program officers at the latest CBA National Immigration Law Conference in Ottawa were recommending that Counsel fill in the gaps of employment (much in the way we do 10 year work history attachments) with explanations. Again, whether this is acceptable practice is not readily clear from the way the electronic form is formatted.
Do note:
Continuous, skilled (NOC O, A, B) work experience of:
- at least 1 year (Canadian work experience) in the last 3 years for the Canadian Experience Class;
- and 1 year (can be Canadian or Foreign work experience) in the last 10 years for the Federal Skilled Worker Program;
are still front end requirements to qualify for Express Entry and are not affected by these technical amendments.
Canadian Film or Video Production Tax Credit and Canadian Immigration (Part 1)
The intersections between entertainment law and immigration law has traditionally been a front-end discussion. Which type of entertainers can come in without a work permit? Which will require one? Are there any LMIA-exemptions?
Very little attention has been paid to the back-end, long-term benefit of having a Canadian permanent resident or Citizen involved in the production of a film. There is a benefit. That benefit is a refundable 25% tax credit for utilizing Canadians.
I will try to do this topic justice here in a series of posts.
- Part 1 will provide an overview of the CPTC tax credit, review the general eligiblity guidelines relating to immigration, and highlight the “Canadian” Requirements for both Film Production and Distribution companies as well as Producer-Related Personnel.
- Part 2 will look specifically at Creative Key Personnel, and why you may see so many films filmed in Canada with Canadian actors and directors. It will also look at some the key exceptions.
- Part 3 will look at Joint Productions and how some of Canada’s Telefilm Co-Production Agreements can be implemented in an immigration savy way. I will also wrap up on some potential Canadian Immigration related strategies.
What is the CPTC?
The Canadian Film or Video Production Tax Credit (CPTC) is fully refundable tax credit, available at a rate of 25 percent of the qualified labour expenditure of an eligible production. The CPTC is jointly administered by the Canadian Audio-Visual Certification Office (CAVCO) and the Canada Revenue Agency. (see: http://www.pch.gc.ca/eng/1268752355851)
General Guidelines
In the CPTC Guidelines (the “Guidelines”) there is a list of 11 requirements in order to meet the program eligibility. Several of these criteria touch upon the importance of ensuring certain key individuals and entities are Canadian. I will address only the ones relevant to immigration. The Guidelines state (emphasis added):
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All producer-related personnel (other than those receiving exemptions permitted in limited circumstances) must be Canadian. For productions involving non-Canadian development, financing or distribution, the producer should read s. 4.09 and s. 4.10 thoroughly before entering into any agreements with non-Canadians.
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Not less than 75% of the total of all costs for services provided toward producing the production (other than excluded costs) must be payable for services provided to or by individuals who are Canadians, and not less than 75% of the total of all costs incurred for the post-production must be incurred for services provided in Canada. (s. 5.06)*
I will analyze s.4.09 and s.4.10 in Part 2 of my series on this topic.
“Canadian” production company and distribution company requirements
The guide goes on to discuss the requirement for the CPTC applicant production company and the Canadian distribution company to be Canadian (emphasis added):
To qualify for the CPTC, the applicant production company, and if applicable, the Canadian distribution company through which it will distribute the production in Canada, must be owned and controlled, either directly or indirectly, by Canadian citizens or permanent residents in accordance with definitions found in a combination of the Citizenship Act, the Immigration and Refugee Protection Act (which replaces the Immigration Act) and the Investment Canada Act (ICA). This requirement is set out in subsection 1106(1) of the Regulations of the Income Tax Act.
By virtue of s. 1106 of the Income Tax Regulations, CAVCO must determine, among other things, whether a corporation’s shareholders are “Canadian” within the meaning of s. 3 of the ICA. According to the ICA, Canadian means (emphasis added in original and in analysis):
A Canadian citizen;
A permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act, who has been ordinarily resident in Canada for not more than one year after the time at which he or she first became eligible to apply for Canadian citizenship;
A Canadian government, whether federal, provincial or local, or an agency thereof; or
An entity that is Canadian-controlled, as determined under subsection 26(1) or (2) and for which there has been no determination made under subsection 26(2.1) or (2.11) or declaration made under subsection 26 (2.2).
For greater clarity, an individual is “Canadian” for the purpose of determining Canadian control of a corporation if it can be established that he or she is:
- A Canadian citizen; or
- A permanent resident, within the meaning of subsection 2(1) the Immigration and Refugee Protection Act, who i) is ordinarily resident* in Canada and ii) is not eligible to apply for Canadian citizenship or has not been eligible to apply for Canadian citizenship for more than one year.
*To be considered “ordinarily resident” in Canada, an individual must demonstrate that he or she has taken residence in Canada in his or her usual day-to-day routine.
As you can see, the CAVCO/ICA definition of Canadian in respect of permanent residents is stricter than the definition provided in IRPA. The individual not only must be a permanent resident but also one who is ordinarily resident (by definition essentially lives in Canada) and as well cannot have been eligible for Citizenship for more than one year at which time they have did not applied to obtain Citizenship status.
“Canadian” Production-Personnel Requirements
To further complicate things, a different definition of Canadian from the Investment Canada Act is applied when determining whether the producer-related personnel is Canadian.
It is written (emphasis added):
Production Personnel
4.01 Proof of Canadian Citizenship or Permanent Residency
4.01.1 Requirements
Other than where a production is a treaty co-production, a production company must provide proof that individuals for whom key creative points are being requested, as well as individuals occupying producer-related positions, are Canadian. With respect to producer-related or key creative personnel for a production, the term “Canadian” is defined as a person who is, at all relevant times, a Canadian citizen as defined in the Citizenship Act, or a permanent resident as defined in the Immigration and Refugee Protection Act. The person must be Canadian during the entire time he or she performs any duties in relation to the production.
The CPTC Guidelines do not specify or clarify what “during the entire time he or she performs any duties in relation to the production.” However, the Canada Radio-Television and Telecommunications Commission in their guide (see: http://www.crtc.gc.ca/canrec/eng/guide2.htm) to their own “Canadian content” certification and application process provides guidance that is likely cross-applicable. The CRTC guide states (emphasis added):
Canadian at all relevant times means that an individual must be Canadian at the time he or she begins his or her duties in relation to the production and during the entire course of the filming or taping and post-production. An individual cannot acquire permanent resident status in order to qualify as Canadian at any point during a production; such status must be confirmed before the individual begins engaging in any activity related to the production. An individual acquiring permanent resident status after he or she begins engaging in any activity related to the production will be considered a non-Canadian for the entire production. Likewise a corporation must be a Canadian-controlled corporation during the same time period.
Therefore it is important that applicants confirm the status of each person who will occupy a key creative position before the person begins engaging in any activity related to the production.
This issue is one that I will believe will be at the crux of where an immigration lawyer can add value. “Activity related to the production” seems very broad reaching, particularly where in the entertainment field there is a lot of cross-collaboration and sharing between film projects and also a very short transition (one day) between temporary residence and permanent residence.
Reading the above, it appears that it will be very important for Production Companies to keep a very good record of each production personnel’s start dates, along with their immigration status throughout the film production process. This along with important dates such as permanent residency card expiry dates, as expired PR cards will trigger the need to reapply to CAVCO to obtain a new personnel number (more on this in my next post!).
In part two, I will get to the fun stuff. A film (live production and animated) has several key creative personnel – directors, lead actors – what are the rules for them? How many need to be “Canadian” to qualify for the CPTC tax credit? STAY TUNED!!
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My Value Proposition
My Canadian immigration/refugee legal practice is based on trust, honesty, hard-work, and communication. I don’t work for you. I work with you.
You know your story best, I help frame it and deal with the deeper workings of the system that you may not understand. I hope to educate you as we work together and empower you.
I aim for that moment in every matter, big or small, when a client tells me that I have become like family to them. This is why I do what I do.
I am a social justice advocate and a BIPOC. I stand with brothers and sisters in the LGBTQ2+ and Indigenous communities. I don’t discriminate based on the income-level of my clients – and open my doors to all. I understand the positions of relative privilege I come from and wish to never impose them on you. At the same time, I also come from vulnerability and can relate to your vulnerable experiences.
I am a fierce proponent of diversity and equality. I want to challenge the racist/prejudiced institutions that still underlie our Canadian democracy and still simmer in deep-ceded mistrusts between cultural communities. I want to shatter those barriers for the next generation – our kids.
I come from humble roots, the product of immigrant parents with an immigrant spouse. I know that my birth in this country does not entitle me to anything here. I am a settler on First Nations land. Reconciliation is not something we can stick on our chests but something we need to open our hearts to. It involves acknowledging wrongdoing for the past but an optimistic hope for the future.
I love my job! I get to help people for a living through some of their most difficult and life-altering times. I am grateful for my work and for my every client.
Awards & Recognition
Canadian Bar Association Founders' Award 2020
Best Canadian Law Blog and Commentary 2019
Best New Canadian Law Blog 2015
Best Lawyers Listed 2019-2021
2023 Clawbies Canadian Law Blog Awards Hall of Fame Inductee
Best Canadian Law Blog and Commentary 2021
Canadian Bar Association Founders' Award 2020
Best Canadian Law Blog and Commentary 2019
